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Toyota-Mazda’s $1.6 billion Alabama plant leaves room to expand

By John LippertBloomberg

January 11, 2018

A worker stands next to vehicles moving along a conveyor on the Prius hybrid and Priyus plug-in hybrid vehicle (PHV) production line of the Toyota Motor Corp. Tsutsumi plant in Toyota City, Aichi, Japan. In 2021 Toyota will be building cars in Alabama at a new factory jointly operated with Mazda. (Noriko Hayashi/Bloomberg)

The 2,500-acre Huntsville location announced Wednesday is more than twice as big as the 1,100 acres the partners targeted initially, according to Bob Carter, Toyota’s sales chief for North America.

“We always like to have plans and options for the future,” Carter said, when asked if the bigger parcel is intended to accommodate expansions. He said the company has no additional announcements to make at this time.

The Japanese automakers had been narrowing the list of possible locations for months before choosing the site that’s just 14 miles from Toyota’s nearby engine plant. The final location in the mostly non-unionized South also came with tax credits, abatements and training worth $370 million, according to Jerry Underwood, a spokesman for the Alabama Department of Commerce. The factory is expected to create 4,000 new jobs, which President Donald Trump praised during his November trip to Tokyo.

The city of Huntsville will vote on additional incentives today, Underwood said. The details hadn’t been finalized, but the combined total will be less than the $1 billion in incentives that Toyota and Mazda had targeted at the beginning of the process, he said.

President Donald Trump tweeted, “Good news: Toyota and Mazda announce giant new Huntsville, Alabama, plant which will produce over 300,000 cars and SUV’s a year and employ 4000 people. Companies are coming back to the U.S. in a very big way. Congratulations Alabama!”

Good news: Toyota and Mazda announce giant new Huntsville, Alabama, plant which will produce over 300,000 cars and SUV’s a year and employ 4000 people. Companies are coming back to the U.S. in a very big way. Congratulations Alabama!

A workforce already well-versed in the automotive industry also helped contribute to the site selection. The Huntsville area has 50,000 auto-related jobs, Carter said, calling the new plant an “additive to an already-robust manufacturing sector in northern Alabama.”

The shared factory set to open in 2021 is the only new auto assembly plant to be announced under Trump, who has pressured Toyota and other carmakers to make more of their vehicles in the U.S. It will be Toyota’s 11th assembly plant in the U.S. – its biggest market – and Mazda’s first. Mazda will produce crossovers alongside Toyota Corolla compact cars at the joint facility.

Alabama autoland

Once the factory begins output, the state will pass Kentucky to become the South’s biggest automaker, a forecast from IHS Markit shows. The following year, it will edge out Indiana to become No. 2 in the country, behind only Detroit’s home state.

Alabama ranked 44th out of 48 mainland U.S. states in overall manufacturing costs last year, contributing to its appeal, said John Boyd, a site selection specialist based in Princeton, New Jersey, who didn’t work on this deal. Alabama and its neighbors have also pioneered the development of state-run worker training programs, he said.

“The center of gravity for the U.S. auto industry is in the Southeast right now,” he said. “The Toyota-Mazda announcement really puts an exclamation point on this.”